Compound Finance Adds Ethena's USDe Stablecoin and Mantle's mETH LST to Its Lending Platform

Decentralized lending and borrowing platform Compound is adding Ethena’s stablecoin and Mantle’s liquid staking token (LST) to its protocol, Mantle told Cointelegraph.

On Jan. 8, Compound’s tokenholders voted to add stablecoin USDe and mETH, Mantle’s LST, to the decentralized finance (DeFi) protocol as lending collateral.

The integration will further drive the adoption of Ethena’s yield-bearing stablecoin and Ether ETHUSD LSTs.

Compound is among the Ethereum network’s most popular DeFi lending protocols, with over $2.7 billion in total value locked (TVL), according to DefiLlama.

“Discussions are in the works to introduce and integrate cmETH” on Compound, Mantle said in a statement, referring to the DeFi protocol’s liquid restaking token (LRT).

DeFi TVL is approaching highs not seen since 2021, driven largely by the adoption of LSTs and LRTs, such as mETH and cmETH, according to DefiLlama.

As of Jan. 9, aggregate DeFi TVL stands at over $117 billion, marking a nearly 150% increase year-to-date, according to DefiLlama. It still lags 2021’s highs of $170 billion, the data shows.

Restaking involves taking a token that has already been staked — posted as collateral with a validator in exchange for rewards — and using it to secure other protocols simultaneously.

As of Jan. 9, Mantle’s mETH is generating a 2.86% annual yield on staked ETH. Its cmETH token further enhances yields with restaking rewards.

Stablecoin market capitalizations rose sharply after US President-elect Donald Trump’s Nov. 5 election win. Trump has pledged to make America “the crypto capital of the world.”

Since November, the combined market capitalizations of the top three stablecoins — Tether’s USDt USDTUSD, USD Coin USDCUSD and Dai DAIUSD — have increased by more than $25 billion, according to investment bank Citi.

In December, Ethena’s USDe overtook Sky’s (formerly Maker) Dai in total market capitalization, becoming the third-largest stablecoin after USDT and USDC.

Launched in February, USDe bootstrapped billions of dollars from stablecoin holders pursuing double-digit APRs.

“Since February 2024, sUSDe holders have enjoyed an average APY of 17.5%, peaking at 55.9% (March 7, 2024) and bottoming at 4.3% (August 8, 2024),” cryptocurrency research firm Messari said in a December note.

As of Jan. 9, staked USDe, or sUSDe, is yielding approximately 11.25% annual percentage returns, according to DefiLlama.